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Finance Minister Says Cyprus’s Economy is Much Better Than the Rest of the EU
2008-11-28 14:44:19

Nicosia, Nov 27 - Cyprus Finance Minister Charilaos Stavrakis reiterated here Thursday that Cyprus's economy is fairing ''much better'' than that of other European Union member states, noting that the government has drafted plans to tackle negative effects from the global financial crisis.

Mr. Stavrakis discussed today with EU ambassadors to Cyprus the prospects for the Cypriot economy, in the wake of the global financial crisis, while special reference was made to the 200 billion euro economic recovery plan announced yesterday by the EU Commission President.

Cyprus's economy is ''in a far better situation'' than the rest of the EU member-states with high growth rates and full employment, Mr. Stavrakis noted.

Recalling that the government responded to the crisis by increasing state spending by an additional 42 million euro package, Mr. Stavrakis said that a working group comprising the Permanent Secretaries of the Ministries has been set up to improve the implementation rate of the development spending in the 2009 state budget, exceeding 1 billion euro.

“A 10% increase in the implementation rate of the development budget creates an additional liquidity of 100 million euro for the Cypriot economy,” Mr. Stavrakis said, adding that these two measures promoted by the government to tackle possible problems by the financial crisis amount to 1% of the GDP.

The Finance Minister added that measures to be taken by other EU member-states through the economic recovery plan “will very much help Cyprus given the fact that a big part of this amount will be spent on tourism and services and therefore, they will directly or indirectly be assisting our economy.”

Asked whether the government is planning a VAT reduction, Mr. Stavrakis said that VAT in Cyprus is at the lowest rate the EU dictates, namely at 15%.

“Therefore there is no room for further VAT reduction,” he added.

“We have the lowest tax coefficients in Europe and therefore it would better additional government spending to be utilized on infrastructure, which improves our competitiveness and creates additional jobs. This will cover the vacuum, possibly to be created by a reduction in the demand by foreigners for holiday housings,” he concluded.

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